Poynting results augur growth potential

Sep 27, 2013

Poynting, a leading producer of specialised antennas and telecommunication products to the local and international cellular, wireless data and defence markets, released strong results and highlighted its future potential.
Net profit after taxation increased from R7,233-million in 2012 to R9,840-million in 2013 while basic earnings per ordinary share increased from 8,18 cents to 10,48 cents per share.

The net tangible asset value per share increased from 32,81 cents to 39,95 cents per share. Commercial Division revenues increased by 10,97%, showing the benefits of mass production in China, while Defence Division revenues increased by 36,57%. EBITDA at R18,5-million has grown by 24,96% and equates to 19,75 cents per share.

Poynting has an aggressive growth plan which aims to take revenue to R1-billion over a three to five year period.

“Growth will be in the form of acquisitions of new businesses, including strategic acquisitions to expand current business divisions in terms of product and distribution and investing into completely new business areas,” says CEO Andre Fourie.

“Our recent binding Heads of Agreement to acquire Aucom will considerably enlarge the Company and gives us further diversification in terms of products and markets. We are well positioned to realise the enormous growth potential across all our business divisions.”

A local company with strong Research and IP, including 49 patents, designs and trademarks, Poynting has tapped into export markets including Europe, the United States of America, Australia, the Middle East and Asia with market-leading antenna technologies.

“Poynting has succeeded in exporting unique locally developed technology into two of the largest first world markets against significant international competitors,” says Fourie. “We believe the export numbers are still low and that considerable growth in export sales is possible given the size of the international market for both Commercial and Defence products.”

Poynting’s commercial antennas are used with or within cellular and wireless data end-user equipment, enhancing internet access and increasing throughput while also making connections more consistent. Technologies include GSM, HSPA, 3G, 4G, LTE, WiFi, iBurst and related technologies.

Fourie highlights that the market for these antennas is rapidly increasing with cellular data revenues growing by between 20% and 50% and actual data usage and devices roughly doubling annually.

“Especially in Africa, uptake of internet access is growing massively. Poynting antennas find a particular niche in fixed wireless (office or home internet) usage and machine-to-machine (“M2M”) market applications, such as vehicle tracking, credit card terminals, remote electricity and a host of other telemetry applications.

“Many new applications appear as the cost of connectivity drops – this includes home alarm systems, irrigation, video surveillance, anti-poaching detection devices and vending machines.”

Poynting is further entering the cellular micro base station market, supplying network operators who need to provide at least 10 times more base stations to provide capacity for data demand.

The Defence Division growth against a backdrop of lower international spending on defence as achieved via a vast increase in international customers in the past financial year.

Through the acquisition of Radiant Antennas, the Defence Division has further extended its focus to the larger defence communication market from the previously predominantly serviced Electronic Warfare market, selling to military system integrators and specialised distribution partners.

“The combination of broadband antenna technology and knowhow in mass producing 3G broadband antennas, together with Radiant Antennas’ existing mechanical and electrical designs, place Poynting in an almost unique position to capitalise on supplying the growing defence communication market,” says Fourie.

Joint business endeavours between Poynting and acquisition Aucom will bear fruit in a new market area for Poynting as African countries convert from analogue to digital TV.

Poynting has developed the first new Digital TV antenna in 50 years for domestic use, the DigiAnt, which Poynting will both manufacture and licence manufacturing internationally. Its low production costs and a packaging volume make it attractive in markets wishing to promote local production.

The solar-powered innovation, SunPoynt TV, provides TV, lights and device charging for six hours or longer per night. The addition of a decoder makes it suitable for viewing TV in areas without electrical power.

By adding a 3G modem and wireless keyboard, internet access is possible. Another significant technology is the VeriPoynt TV installation verification system. VeriPoynt devices communicating to a cloud computer
can be used to verify successful installation of terrestrial or satellite based TVs by installers.

“Poynting’s profitable existing operations, strong balance sheet, deceptively valuable IP portfolio and innovative capacity places it in a favourable position to achieve growth objectives and reward shareholders in the future. Competitive manufacturing capacity, quality and logistical systems and relationships with China are further tangible strengths for Poynting,” concludes Fourie.

“We do follow a strategy of accepting risk as we aggressively implement growth strategies and investors should acknowledge that exposure to risk is part and parcel of investing in a company of this nature.”